Days before the California legislature adjourns, a conference committee on Friday offered a basket of actions regarding wildfires without a specific solution to the utility liability issue.
The nine-point program is included in a report by committee co-chairs state Sen. Bill Dodd and Assemblymember Chris Holden. The legislative vehicle could be used this week in hopes of securing a bill for Gov. Jerry Brown’s signature before the session ends Friday.
The program addresses past as well as future wildfires, and carries a so-called securitization provision that would create investor-owned utility ratepayer protection bonds.
“We must stand with past victims, prevent future fires from claiming new victims, and protect the long-term interests of every utility ratepayer in this state,” Dodd told the 10-member conference committee. “We can all agree that the status quo is unacceptable and we have a real opportunity to make progress toward these goals.”
The California-applied standard for inverse condemnation (IC) for utilities is not addressed, but there would be new requirements for both public and private-sector utilities. Utilities would be required, among other things, to have their fire prevention and planning requirements reviewed by the California Department of Forestry and Fire Protection, aka Cal Fire.
For private-sector utilities, the California Public Utilities Commission could allow them to sell revenue bonds to help pay off catastrophic fire-related debt and to manage ratepayer costs to avoid rate spikes.
Washington, DC-based Height Capital Markets called the proposed securitization provisions “an imperfect solution” for liability issues.
“While we do not view the package outlined by the committee as a substantial legislative fix for liability, we do believe that a version allowing very limited use of securitization could pass the full legislature,” according to Height’s commentary.
In the long term, utility liability and the IC issue are to be addressed under a blue ribbon commission that would report recommendations next year to the legislature and governor “on more effective ways to socialize the costs of damages from wildfires and whether to set up a fund to assist in the payment of costs.”
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